Did TNX Cause the Fed to Pull the Plug on Stocks?
Stock-Markets / Stock Markets 2015 May 19, 2015 - 06:14 PM GMT
ZeroHedge comments, “For the last 9 days in a row, no matter what is occurring in the markets, US Treasuries have begun to sell-off at 1330ET... Some have suggested this points to funding issues being a driver of recent weakness, with the USD up by the most in 2 days since oct 2011, we shall see if the need to sell down USTs is there for the 10th day in a row...”
It appears that the spike in yields may have the Fed worried as the 10-year yield approached its breakout point this morning. I can only guess that they will do anything, including their recent signaling about stocks being a little too pricey. Now we have the ECB jawboning about how they will be doubling down after finding out that what they had done so far wasn’t working. We could make a Keystone Cops movie about this one…
Whether this is a coincidence or not, the market peaked precisely at 1345 hours, ET. The turn came a day later than my Model forecast, but this appears to be the real thing.
There are no sell signals to employ here, other than what appears to be a completed Ending diagonal Wave structure, with a Megaphone ending.
The first serious warning of the decline may come at Short-term support at 2107.40. The sell signal will gather momentum beneath the 50-day Moving Average at 2091.92. This is a very short distance away, so stay on the alert. Confirmation will further come beneath the Wave [iv] low at 2067.93.
We will start watching the VIX and Hi-Lo index tomorrow for evidence of the decline.
Regards,
Tony
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